Coupon Remedies in Antitrust Cases: The Form of the Discount Also Matters
DOJ Economic Analysis Group Discussion Paper No. 03-3
17 Pages Posted: 25 Jun 2003
Date Written: February 10, 2003
Buyers injured by price fixing may file damage actions which often end with cash compensation to the injured. Compensation in the form of coupons (or scrip) has been growing since 1975, however, despite the fact that a wide variety of market and redemption characteristics can affect the (lack of) worth of scrip in the post-settlement period. This paper analyzes, in a representative framework, how three different monetary forms that scrip can take affect the way scrip performs. It finds that scrip which gives a fixed absolute money discount off price (rather than either a percentage discount or the right to buy at a defined price) performs worst. It provides the least compensation to the injured scrip-receiving buyers, the most injury to non-scrip-receiving buyers, the lowest level of deterrence to price fixing, and it harms the efficiency of that product market. The paper also finds that 90% of the $1.22 billion in scrip issued since 1975 in 36 identified settlements is of this fixed absolute money discount form.
Keywords: coupon, scrip, antitrust, remedies, discount, form
JEL Classification: K13, K21, K41, L11, L40
Suggested Citation: Suggested Citation